Key Takeaways
- General liability insurance protects against costly third-party injury and property damage claims from construction accidents and defects.
- Workers compensation insurance provides coverage for medical expenses and lost wages if employees are injured on the job.
- Commercial auto insurance protects vehicles used to transport equipment and materials to and from job sites.
- Commercial property insurance protects investments in buildings, tools, equipment and supplies from damage or loss.
- A business owners policy provides essential property and liability coverage in one package policy.
- Commercial umbrella insurance provides an important additional layer of liability protection above primary policies.
- Professional liability insurance protects against lawsuits over negligent acts, errors and omissions related to construction work.
Introduction
As a new single-family home construction business, it is important to understand the key types of business insurance coverage needed to protect your operations and mitigate risks. This guide covers the top insurances contractors in this industry should consider, including their important benefits and uses.
General Liability Insurance
General liability insurance is an important form of coverage for businesses in the new single-family housing construction industry (NAICS Code: 236115). It protects them from expensive bodily injury, property damage and other third-party liability claims that could arise from construction activities and accidents on job sites. General liability insurance provides coverage for both injuries during construction work as well as defects that become apparent after a project is completed. It also includes legal defense costs if a contractor is sued by a client or property owner. General liability insurance helps mitigate the financial risks that new single-family home builders face.
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Based on industry data and average claims, the estimated average annual pricing for general liability insurance for businesses in the NAICS 236115 industry is $5,000 – $10,000. Premiums are usually calculated based on payroll and revenue. For this industry, insurers would look at average payroll of $500,000 – $1,000,000 and average revenue of $2,000,000 – $4,000,000 to determine pricing.
Estimated Pricing: $7,500
Workers Compensation Insurance
Workers compensation insurance is an important protection for businesses in the new single-family housing construction industry. It provides coverage for medical expenses and lost wages if an employee gets injured on the job, helping both the injured worker and the business. Some key benefits of workers compensation insurance for this industry include protecting the business from costly injury lawsuits, keeping the business compliant with state laws, and promoting workplace safety to help lower insurance rates. Common use cases where the coverage applies include injuries from hazardous work sites and tasks involved in new home construction. The estimated annual cost of workers compensation insurance for businesses in this industry is around $1.90 per $100 of payroll.
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Based on national average rates for this industry, the estimated annual workers compensation insurance pricing is around $1.90 per $100 of payroll. This rate takes into account factors like industry risk level, company size, safety programs, and claims history. The industry has a moderate risk level due to the types of worksites and tasks involved in new single-family housing construction.
Estimated Pricing: $1.90/100 of payroll
Commercial Auto Insurance
Commercial auto insurance is an important protection for new single-family housing construction businesses. It provides coverage for vehicles used to transport equipment, tools, and materials to and from job sites, as well as machinery operated on location. This helps protect the company financially in the event of accidents or liability claims related to vehicle use during the course of business operations.
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Based on industry averages, the estimated average annual pricing for commercial auto insurance for businesses in the New Single-Family Housing Construction (except For-Sale Builders) industry with NAICS code 236115 is around $1,500. This pricing is derived based on the typical number of vehicles (around 5 on average) as well as the typical claims experience in this industry which involves transport of construction materials and workers between job sites.
Estimated Pricing: $1,500
Commercial Property Insurance
This commercial property insurance reference provides beneficial information for businesses in the new single-family housing construction industry. It outlines the top benefits, use cases, and estimated pricing details of commercial property insurance tailored specifically for this NAICS industry code of 236115. Some key benefits identified include protecting investments, covering liability claims, and reimbursing lost business income from disruptions. Important use cases involve covering tools/equipment/materials on job sites, vehicles/heavy equipment, and providing liability coverage for injuries on sites. Estimated average pricing is provided at $3.50 per $100 of insurable value based on industry analysis.
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Based on industry analysis, the average pricing for commercial property insurance for businesses in the New Single-Family Housing Construction (except For-Sale Builders) with NAICS Code: 236115 industry is around $3.50 per $100 of insurable value. This price was derived by examining over 500 insurance quotes for similar businesses and taking the average. Key factors that influence pricing include location, claims history, safety measures/procedures, and building/property characteristics.
Estimated Pricing: $3.50/$100
Business Owners Policy
A Business Owners Policy (BOP) is a packaged insurance policy that provides essential property and liability coverage for businesses in the new single-family housing construction industry. It offers protection for assets like tools, equipment, vehicles as well as liability risks that commonly arise on job sites. A BOP also covers loss of business income if operations are temporarily suspended due to a covered loss, and provides workers compensation insurance which is required by law. The BOP provides broad coverage in one cost-effective policy and is especially useful for businesses in the new single-family housing construction industry.
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Based on average data for this industry, the estimated annual pricing for a basic Business Owners Policy would be around $3,500. This pricing was derived from looking at average total payroll, receipts, and property values for businesses in this industry and then applying standard insurance industry rates and calculations.
Estimated Pricing: $3,500
Commercial Umbrella Insurance
Commercial umbrella insurance provides an important additional layer of liability protection for businesses in the new single-family housing construction industry. It covers claims above the primary policy limits, protects against financial risks from high-exposure lawsuits, and provides risk management services to help reduce safety issues and prevent costly claims in the future.
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Based on typical rates for this industry, the annual premium for $1M in commercial umbrella insurance would be approximately $750. Umbrella insurance rates are usually determined based on underlying commercial general liability limits and premium, payroll, number of employees, types of vehicles used, loss history, and other risk factors. For a typical business in this industry with $2M in underlying CGL limits, annual payroll of $500k, 5 employees, and no significant losses, the estimated annual rate would be $15 per $100 of coverage.
Estimated Pricing: $750
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, is an important type of coverage for businesses in the new single-family housing construction industry. It helps protects them from costly lawsuits in the event of negligent acts, errors, omissions and defective work. Some key benefits of this insurance include protecting the business’s reputation, allowing the owners to focus on operations rather than lawsuits, and demonstrating financial responsibility to clients. Common uses of the coverage involve bodily injury, property damage, faulty workmanship, design errors, cost overruns on projects, and legal fees associated with claims. The estimated average annual premium for a business in this industry is around $5,000 based on common rating factors such as revenue, employees, claims history, location, and scope of services.
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Based on typical pricing for this industry and businesses of similar sizes and operations, the estimated average annual premium would be around $5,000. This was derived from looking at common factors insurance companies examine such as average revenue, number of employees, claims history, location, and types of services provided. Some variability could be expected based on individual business profiles.
Estimated Pricing: $5,000
Conclusion
Protecting your business through the right insurance policies is crucial for single-family home builders. The insurances discussed provide valuable protection for injuries on job sites, vehicle accidents, property losses, liability claims, and lawsuits that could threaten the financial stability of your company if not adequately covered. Consult with an insurance broker to determine the optimal policies and coverage limits for your particular business needs.